Chinese tiger offers a world of opportunities
Rabobank was directly involved in the Dutch trade mission to China. The Chinese government is currently seeking to professionalise the country’s food & agri sector and this provides opportunities both for Dutch companies and Rabobank.
The Rabobank organisation has been located in China since 1995 and is represented in the capital Beijing and in the port city Shanghai, where the bank’s international desk is also situated. In 2010, Rabobank furthermore invested 250 million US dollars in a partnership with the Agricultural Bank of China (ABC), an agricultural rural bank that is one of China’s four largest banks. Rabobank China CEO Wilco Hendriks and Rabobank International Management Team Member Jan van Nieuwenhuizen participated in the trade mission and were also closely involved in its planning.
Starting at the top
The visit of Dutch Prime Minister Mark Rutte and Dutch Foreign Trade and Development Cooperation Minister Lilianne Ploumen to China and the related trade mission are good for the Dutch business community’s public relations. Hendriks: 'Doing business with China starts at the highest level. The fact that Prime Minister Mark Rutte is meeting his Chinese counterpart, President Xi Jinping, is a good sign. This shows they are taking the visit seriously. Rutte opens the doors and Dutch companies can then follow in his footsteps to establish agreements at the highest level. The Netherlands is a small, but productive country and has state-of-the-art technology in sectors including agriculture and horticulture. The Dutch business community has a tremendous amount to offer China and this trade mission gives us a platform to get this message across.'
Primarily the developments in the Chinese food and agri sector are important to Rabobank. 'While the Chinese population is drinking more and more milk, the country’s agricultural sector is not aligned to this growing demand. The sector is comprised of smallholders who have three or four cows and deliver their milk to a local milk station every day. After a couple of major food safety issues and in light of the continually increasing demand for dairy, the Chinese government is now seeking to professionalise the agricultural sector at a rapid pace. It wants to see the establishment of mega-farms, which are farms that have at least a thousand cows and their own veterinarian, refrigeration facilities and perhaps even their own milk factory. So they have everything that is needed to make the chain as safe as possible.'
Rabobank China is committed to playing a role in the realisation of these mega-farms. 'Matching knowledge is one way we can help in the process of making the dairy chain larger and safer. All the large milk producers are already clients of ours and they are now planning to start their own mega-farms. While one client will need genetics for this, another will need technology. We will do our best to find someone within our international network for them who has this specific knowledge. This means we will initially only serve as the matchmaker, but we also hope this will eventually generate banking business.'
'Land serves as collateral for loans in the West, but all of the land in China is owned by the state, which is one of the main reasons why the farms in the country continue to be so small-scale. Rabobank looks for innovative solutions such as taking out a mortgage on the cattle and milk purchase contracts in order to still be able to finance the large farms. You need economies of scale for this and that is only possible with very large farms. Chinese banks are not used to financing farmers because they think all that living property could potentially lead to any number of problems. They currently think it is still too risky. We can help them to develop the sector in this respect.'
Chances abound in Asia and there continue to be a host of opportunities for Rabobank in the region. 'We are already doing a great deal, but we can still do much more. Our outstanding international network enables us to serve the entire global food chain. We can serve our food and agri customers internationally. We recently matched a Chinese organic milk producer with a Brazilian organic soybean farm. We are increasingly better able to match our customers with each other worldwide and our network is becoming more and more efficient. We have a very impressive food and agri customer portfolio internationally. We can be proud of this achievement and can look forward to a fantastic future given the increasing world population and the growing demand for food.'